Affiliation:
1. US Census Bureau (email: )
2. Federal Reserve Bank of Dallas ()
3. University of Minnesota, Federal Reserve Bank of Minneapolis, and National Bureau of Economic Research ()
4. University of Wisconsin and National Bureau of Economic Research ()
Abstract
Applying the Foster, Haltiwanger, and Krizan (2001) decomposition to plant-level manufacturing data from Chile and Korea, we find that the entry and exit of plants account for a larger fraction of aggregate productivity growth during periods of fast GDP growth. To analyze this relationship, we develop a model of firm entry and exit based on Hopenhayn (1992). When we introduce reforms that reduce entry costs or reduce barriers to technology adoption into a calibrated model, we find that the entry and exit terms in the FHK decomposition become more important as GDP grows rapidly, just as they do in the data from Chile and Korea. (JEL D24, E23, L13, L60, O14, O32, O47)
Publisher
American Economic Association
Subject
General Economics, Econometrics and Finance
Cited by
8 articles.
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